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24 1994

INVESTMENT LIMITED PARTNERSHIPS ACT, 1994

PART V

Powers of the Bank

Maintenance of records and powers of authorised persons.

25. —(1) Every general partner and custodian shall keep at an office or offices within the State such books and records (including accounts) as may be specified from time to time by the Bank in the due discharge by the Bank of its statutory functions and shall notify the Bank of the address of every office at which such book or record is kept for the purposes of this Act.

(2) (a) An appropriate person duly authorised in writing in that behalf by the Bank (in this section referred to as “an authorised person”) may, for the purpose of the performance by the Bank of its statutory functions and upon production of his authorisation, at all reasonable times, inspect and take copies of or extracts from, and make such enquiries as he may consider in relation to—

(i) the books and records kept pursuant to this Act by the general partner or custodian, and

(ii) any books of account relating to the general partner and custodian, and

(iii) any other document relating to the business of the investment limited partnership,

for those purposes enter any office to which subsection (1) relates and any other place where he reasonably believes any books, records or other documents as aforesaid are kept.

(b) A person who has in his power, possession or procurement any books, records or other documents aforesaid shall—

(i) produce them at the request of an authorised person and permit him to inspect and take copies of or extracts from them,

(ii) at the request of an authorised person, give any information which may be reasonably required with regard to them, and

(iii) give such other assistance and information to an authorised person as is reasonable in the circumstances.

(c) The provisions of paragraphs (a) and (b) shall apply to every general partner and custodian of an investment limited partnership and the provisions of those paragraphs, other than subparagraph (i) of paragraph (a) shall apply to—

(i) every associated undertaking of the general partner or custodian, and

(ii) any other person associated with the investment limited partnership,

where an inspection of the accounts or other records is, in the opinion of the Bank, materially relevant to the proper appraisal of the business of an investment limited partnership during any period in respect of which an inspection or proposed inspection of the investment limited partnership relates.

(d) The Bank may direct that the expenses of and incidental to an authorised person carrying out functions under this section shall be defrayed by the person to whom this section applies and in respect of whom the section is operated.

(3) Books and records kept pursuant to this section shall be in addition to books or records required to be kept by or under any other enactment, and shall be retained for at least such period as the Bank may specify in respect of such book or record.

(4) (a) In this section, section 26 and section 27

appropriate person” means—

(i) an officer of the Bank, or

(ii) in relation to any particular inspection (including a proposed inspection), any other person who in the opinion of the Bank possesses appropriate qualifications or experience to carry out the inspection, or any part thereof, to which this section relates;

associated undertaking” means, as appropriate—

(i) a holding company of the general partner or custodian,

(ii) a subsidiary company of the general partner or custodian,

(iii) a company which is a subsidiary of a body corporate where the general partner or custodian concerned is also a subsidiary of a body corporate, but neither company is a subsidiary of the other,

(iv) in the case of a general partner or custodian any other body corporate that is not a subsidiary of the general partner or custodian but in respect of which the company is beneficially entitled to more than 20 per cent. in nominal value of either the allotted share capital or of the shares carrying voting rights (other than voting rights which arise only in specified circumstances) in that other body corporate,

(v) a partnership in which the general partner or custodian has an interest and whose business is, or at the relevant time was, in the opinion of the Bank, materially relevant to any inspection of the general partner or custodian being carried out or proposed to be carried out under this section;

holding company” and “subsidiary company” have the meanings given to them by section 155 of the Companies Act, 1963 .

(b) References in this section to books, records or other documents or to any of them, shall be construed as including any document or information kept in a non-legible form (by the use of electronics or otherwise) which is capable of being reproduced in a legible form and all the electronic or other automatic means, if any, by which such document or information is so capable of being reproduced to which the person whose books, records or other such documents are inspected for the purposes of this Regulation, has access.

(5) Any person who is required to provide an authorised person with books, records or other documents under this section, or to give any information to an authorised person, and who fails to do so, or who knowingly provides an authorised person with information which is false, shall be guilty of an offence.

Appointment and powers of inspectors.

26. —(1) Without prejudice to the powers of the Bank under this Act, the Bank may apply to the court and the court may, if satisfied of the matters set forth in subsection (2), appoint one or more inspectors to investigate the affairs of that investment limited partnership and, where necessary, any associated undertaking and to report thereon in such manner as the court directs.

(2) The court may appoint an inspector under this section where it is satisfied that there are circumstances suggesting that—

(a) limited partners are being oppressed or their interests as limited partners disregarded,

(b) limited partners are not being given all the information relating to the affairs of the investment limited partnership which they might reasonably expect,

(c) the affairs of the investment limited partnership are being conducted with the effect of defrauding its creditors or the creditors of any other person or in an unlawful manner,

(d) there has been persistent default by the investment limited partnership, its general partner or custodian in complying with the requirements of this Act,

(e) persons connected with the formation or management of an investment limited partnership have in connection therewith been guilty of fraud, misfeasance or other misconduct towards it or towards the limited partners, or any one of them,

(f) the appointment of an inspector is otherwise required in the interests of the proper and orderly regulation of investment limited partnerships.

(3) The court may consider matters in exercising its discretion under this provision notwithstanding that they relate to events occurring outside the State.

(4) Before applying to the court to appoint an inspector under this section, the Bank may, if it is of the opinion that it would not be prejudicial to the interests of limited partners or creditors of the investment limited partnership, notify the general partner and custodian of the investment limited partnership concerned in writing of the action which it proposes to take and of the grounds on which it proposes to take and, in such case, the general partner shall within such period as the Bank may set out in the notification, be entitled to give to the Bank a statement in writing explaining its activities.

(5) Where an inspector appointed under subsection (1) thinks it necessary for the purposes of his investigation to investigate the affairs of any other investment limited partnership or any body corporate or present or former associated undertaking of the investment limited partnership he shall apply to the court for an order to widen the scope of his investigation, which order the court may make if it thinks it necessary for the purposes of the investigation, and if granted such order, shall have power to do so, and shall report on the affairs of the investment limited partnership or body corporate or present or former associated undertaking so far as he thinks the results of the investigation are relevant to the investigation of the first mentioned investment limited partnership.

(6) Where the court appoints an inspector under subsection (1) it may, from time to time, give such directions as it thinks fit, whether to the inspector or otherwise with a view to ensuring that the investigation is carried out as efficiently and as cost effectively as is practicable in the circumstances.

(7) (a) It shall be the duty—

(i) of the general partner and custodian, of all officers and agents thereof, and of all agents of the investment limited partnership the affairs of which are being investigated under subsection (1), including persons outside the State, and

(ii) of any other person, including those being investigated under subsection (5), and including persons outside the State, who the inspector considers is or may be in possession of any information concerning the affairs of an investment limited partnership,

to produce to an inspector appointed under subsection (1) all books, accounts, deeds, records or other documents of, or relating to, the business of an investment limited partnership being investigated under subsection (1) which are in their power, possession or procurement to attend before the inspector when required to do so at a specified place and time and otherwise to give to him all assistance in connection with the investigation which they are reasonably able to give.

(b) The inspector may examine on oath or by written interrogatories on oath the custodian, general partner, officer and agents thereof, and all agents of the investment limited partnership being investigated and any such person as is mentioned in subsection (a) of this provision in relation to its affairs and may—

(i) administer an oath accordingly,

(ii) reduce the answers of such person to writing and require that person to sign them.

(c) If an inspector has reasonable grounds for believing that a custodian, general partner, officers or agent thereof, or an agent of the investment limited partnership being investigated or other person being investigated or other person being investigated under subsection (5) maintains or has maintained either at that time or at any time in the past, an account of any description in a credit institution or an account with any other financial institution, including holdings of investment instruments, whether alone or jointly with another person and whether in the State or elsewhere, into or out of which has been paid any money which—

(i) had resulted from or been used in the financing of any transaction, arrangement or agreement relating to the business of the investment limited partnership,

(ii) has been in any way connected with any act or omission, or series of acts or omissions, which on the part of that custodian, general partner, officers or agent thereof, or an agent of the investment limited partnership, constituted misconduct (whether fraudulent or not) towards an investment limited partnership or any client or creditor of the investment limited partnership,

the inspector may require the general partner, officers or agents thereof, or the agent of the investment limited partnership to produce to him all documents in his possession or under his control relating to that account and in this subsection “credit institution account” includes an account with any person exempt by virtue of section 7 (4) of the Central Bank Act, 1971 from the requirement of holding a licence granted under section 9 of that Act.

(d) If any general partner, custodian, all officers and agents thereof and any agents of the investment limited partnership, and of all agents of the investment limited partnership or any such person as is mentioned in this subsection refuses to produce to the inspector any book or document which it is his duty under this section to produce, refuses to attend before the inspector when required to do so, or refuses to answer any question put to him by the inspector with respect to the affairs of the investment limited partnership or other person mentioned in this subsection, as the case may be, the inspector may certify the refusal under his hand to the court and the court may thereupon enquire into the case and, after hearing any witnesses who may be produced against or on behalf of the alleged offender and any statement which may be offered in defence, make any order or direction as it thinks fit including a direction to the person concerned to attend or re-attend before the inspector or produce particular books or documents or answer a particular question put to him by the inspector, or a direction that the person concerned need not produce a particular book or document or answer a particular question put to him by the inspector.

(e) In this section, any references to officers or agents shall include past as well as present officers and agents, as the case may be, and “agents”, in relation to an investment limited partnership shall include a general partner, custodian, the bankers, accountants, solicitors, auditors and the financial and other advisors of the investment limited partnership.

(8) (a) The expenses of and incidental to an investigation and the fees incurred by an inspector appointed by the court under subsection (1) shall be defrayed by the Bank but the court may direct that any person dealt with in the report shall be liable, to such extent as the court may direct, to repay the Bank any expenses or fees incurred.

(b) Without prejudice to subsection (8) (a) of this section, any person who is—

(i) convicted on indictment of an offence on a prosecution instituted as a result of an investigation,

(ii) ordered to pay damages or restore any property in proceedings brought as a result of an investigation, or

(iii) awarded damages or to whom property is restored in proceedings brought as a result of an investigation,

may, in the same proceedings, be ordered to repay all or part of the expenses and fees, referred to in subsection (8) (a) of this section and interest as appropriate, to the Bank or to any person on whom liability has been imposed by the court under that subsection provided that, in the case of a person to whom paragraph (iii) of this subsection relates, the court shall not order payment in excess of one-tenth of the amount of the damages awarded or of the value of the property restored and interest as appropriate as the case may be, and any such order shall not be executed until the person concerned has received his damages or the property has been restored, as the case may be.

(c) The report of an inspector may, if he thinks fit, and shall, if the court so directs, include a recommendation as to the directions, if any, which he thinks appropriate, in the light of his investigation, to be given under subsection (8) (a) of this section.

(9) (a) An inspector appointed under this section may, and shall if the court so requires, make an interim report to the Court, and, on the conclusion of his investigation, but he may at any time in the course of the investigation, without making an interim report, inform the court of matters coming to his knowledge as a result of the investigation tending to show that an offence has been committed.

(b) On a report being presented to it under this section the court shall—

(i) forward a copy of any such report to the Bank,

(ii) if it thinks fit, furnish a copy thereof, to the general partner and the investment limited partnership and its auditors, and

(iii) if it thinks fit—

(a) furnish a copy thereof, on request and on payment of such fees as it may fix, to any other person who is a member of the investment limited partnership or a member of any other body dealt with in the report by virtue of this section or whose interests as a creditor or client of the investment limited partnership or of any other such body appear to the court to be affected, and

(b) cause any such report to be printed and published.

(c) Where the court thinks so proper it may direct that a particular part of a report made by virtue of this section be omitted from a copy forwarded or furnished under subsection (9) (b) (ii) or (9) (b) (iii) (a) of this section or from the report as printed and published under subsection (9) (b) (iii) (b).

(10) (a) Having considered a report under subsection (9) of this section, the court may make such order as it thinks fit in relation to matters arising from that report including—

(i) an order of its own motion for the winding up of an investment limited partnership,

(ii) an order for the purpose of remedying any disability suffered by any person whose interests were adversely affected by the conduct of the affairs of the investment limited partnerships provided that, in making any such order, the court shall have regard to the interests of any other person who may be adversely affected by the order.

(b) If, in the case of any investment limited partnership liable to be wound up under this Act, it appears to the Bank from—

(i) any report made under subsection (9) of this section as a result of an application by the Bank under subsection (1), or

(ii) any report made by an inspector appointed by the Bank under this Act, or

(iii) any information or document obtained by the Bank under this Act,

that a petition should be presented for the winding up of an investment limited partnership, the Bank may, unless the investment limited partnership is already being wound up by the court, present a petition for it to be so wound up if a court thinks it just and equitable for it to be so wound up.

Obligation of general partner and custodian to furnish information.

27. —(1) A general partner and custodian shall each furnish the Bank—

(a) at such times as the Bank may specify from time to time, such information and returns concerning the business of the investment limited partnership or the carrying on of a business as aforesaid by such person, as the case may be, as the Bank may specify from time to time, being information and returns which the Bank considers it necessary to have for the due performance of its statutory functions;

(b) within such period as the Bank may specify, any information and returns (not being information or returns specified under paragraph (a) of this section) concerning the business of the investment limited partnership or the carrying on of that business as aforesaid by such person, as the case may be, that the Bank may request in writing, being information and returns which the Bank considers it necessary to have for the due performance of its statutory functions.

(2) A person shall not furnish information or returns under this section which he knows to be false.

(3) Subsections (1) and (2) shall apply to the business of an associated undertaking to the extent only that the information and returns sought by the Bank are, in the opinion of the Bank, materially relevant to the proper appraisal of the business of the investment limited partnership or the associated undertaking.

(4) Any person who is required to provide the Bank with information or returns and who fails to do so, or who knowingly provides the Bank with information which is false, shall be guilty of an offence.

Change in particulars.

28. —(1) If during the continuance of an investment limited partnership any change is made or occurs in any particulars specified in section 8 (4) (a) to (f) with respect to the investment limited partnership, a statement signed by a general partner specifying the nature of the change shall, within five days of such change, be delivered to the Bank.

(2) No change in any of the matters specified in section 8 (4) (a) to (f) shall take effect until the Bank has issued a letter consenting to such change, and no change in the name of an investment limited partnership shall take effect until an amended certificate of authorisation has been delivered by the Bank.

Revocation of authorisation.

29. —(1) The Bank may revoke the authorisation of an investment limited partnership if it appears to the Bank—

(a) that any of the requirements for the authorisation of the investment limited partnership are no longer satisfied,

(b) that it is undesirable in the interests of the limited partners that the investment limited partnership should continue to be authorised,

(c) without prejudice to paragraph (b), that the general partner or custodian of the investment limited partnership has contravened any provision of this Act or conditions imposed hereunder or, in purported compliance with any such provision, has furnished the Bank with false, inaccurate or misleading information or has contravened any prohibition or requirement imposed under this Act.

(2) The Bank may revoke the authorisation of an investment limited partnership at the request of the general partner or custodian, but it may refuse to do so if it considers that any matter concerning the investment limited partnership should be investigated as a preliminary to a decision on the question of whether the authorisation should be revoked or that revocation would not be in the interests of the limited partners.

(3) The Bank shall, within five days of the revocation of an authorisation, publish notice of that revocation in Iris Oifigiúil and in at least one national daily newspaper.

Replacement of general partner and custodian.

30. —(1) The Bank may replace a general partner or custodian with another general partner or custodian where—

(a) it is satisfied that the general partner or custodian has failed to demonstrate the competence, probity or experience in the discharge of their functions reasonably required of them,

(b) it is satisfied that they are not of sufficiently good repute,

(c) it is satisfied that it is undesirable in the interests of the limited partners that the person should remain as general partner or custodian,

(d) without prejudice to paragraph (c), it is satisfied that the general partner or custodian has contravened any provision of this Act or regulations made thereunder or, in purported compliance with any such provision, has furnished the Bank with false, inaccurate or misleading information or has contravened any prohibition or requirement imposed under this Act or regulations made hereunder.

(2) Upon replacement by the Bank under this section of a general partner or custodian, that general partner or custodian as the case may be shall cease to be a partner of or custodian to the investment limited partnership, without prejudice to the general partner's liabilities in respect of the debts and obligations of the partnership and the powers and duties of the general partner or custodian under the partnership agreement or this Act shall be exercised and carried out by the new general partner or custodian, as the case may be.

(3) The Bank may, by application to the Court, seek such interim or interlocutory relief preventing a general partner or custodian from acting as such or appointing a person to carry out their functions and the court on such application, having regard to the matters set forth in subsection (1) and the protection of the limited partners, may make such order as it deems appropriate.

Notification by Bank of revocation or replacement.

31. —(1) Where the Bank proposes to revoke the authorisation of an investment limited partnership other than at the request of the general partner or custodian under section 29 , or to replace a general partner and custodian under section 30 , it shall give the general partner and custodian notice of its intention to act and, where it proposes to replace a general partner or custodian under section 30 the identity of the proposed new general partner.

(2) Upon receipt of such notification, the general partner shall cause forthwith the limited partners to be informed of the receipt of such notice from the Bank.

(3) A partner or custodian may, within fifteen days of the date of service of a notice pursuant to subsection (1), make written representations to the Bank which period, in the case of representations by a limited partner, the Bank may extend.

(4) The Bank shall have regard to any representations made in accordance with subsection (3) in determining whether to revoke the authorisation of an investment limited partnership or to replace the general partner or custodian, as the case may be.

(5) A general partner who fails to comply with subsection (2) shall be guilty of an offence and shall indemnify any person who thereby suffers loss.

Application to court in case of refusal of authorisation, revocation of authorisation or replacement of general partner or custodian.

32. —(1) Where the Bank refuses an application for authorisation under section 8 , fails to take a decision on an application within three months of the date hereof, revokes or refuses to revoke an authorisation under section 29 , or determines to replace a general partner or custodian under section 30 , any aggrieved party (including a limited partner) may apply to the Court to have the matter reviewed.

(2) Where an application is made under subsection (1), the Court shall confirm the decision of the Bank unless it is satisfied that the procedures laid down by, or the requirements of, this Act have not been complied with in any material respect or that there was no material before the Bank on which the Bank could reasonably conclude—

(a) in the case of a refusal of authorisation or a failure to authorise within three months, that the criteria set forth in section 8 (1) or section 8 (9) have not been established,

(b) in the case of a decision to revoke the authorisation of an investment limited partnership, that the matters set forth in section 29 (1) have been established,

(c) in the case of a decision to replace a general partner or custodian, that the matters set forth in section 30 (1) have been established.

(3) Where the Court does not confirm the decision of the Bank on an application made to it under subsection (2), it may set aside the decision of the Bank or, if the Bank has failed to take a decision within three months, direct it to take a decision within such time as the court may direct, and in any such case, remit the matter to the Bank which shall thereupon reconsider the matter and make a decision in accordance with such procedures and requirements.

(4) Any application under this section shall be made on notice to the Bank, the general partner and the custodian.

(5) Where a general partner brings an application under this section or receives notice of such an application, he shall forthwith cause the limited partners to be informed thereof, and any limited partner shall be entitled to appear before the court and be heard thereon.

(6) A general partner who fails to comply with subsection (5) shall be guilty of an offence.

Directions by the Bank.

33. —(1) Where the Bank is of the opinion that it is in the public interest to do so or in the interests of the proper and orderly regulation of investment limited partnerships, or that any of the requirements for authorising an investment limited partnership are no longer satisfied, or that the investment limited partnership, custodian or the general partner—

(a) has become or is likely to become unable to meet his obligations to his creditors, or

(b) has contravened this Act, or has failed to comply with any condition or requirement imposed under this Act by the Bank on the custodian or the general partner, or in purported compliance with any such provision, has furnished the Bank with false, inaccurate or misleading information, or

(c) is not maintaining adequate capital resources having regard to the volume and nature of its business, or

(d) no longer complies with the capital or other financial requirements imposed by the Bank from time to time,

the Bank may give a direction in writing to that custodian or general partner requiring it to take such steps, including the winding-up of the investment limited partnership or the suspension of the assignment of any partnership interest, as in the opinion of the Bank are necessary in the interests of the proper and orderly regulation of investment limited partnerships or for the protection of limited partners, creditors of the investment limited partnership or creditors of the partners in an investment limited partnership.

(2) For the purposes of subsection (1), the Bank may take into account any matter relating to the investment limited partnership, the general partner or custodian, a director or controller of the general partner or custodian or any person employed by or associated with the general partner or custodian in connection with the investment limited partnership.

(3) Upon receipt of such a direction, the general partner shall within ten days of the date thereof, cause all limited partners of the investment limited partnership to be informed thereof.

(4) The Bank may revoke a direction under subsection (1) of this section unless an order under subsection (8) of this section has been made in respect of the direction.

(5) A custodian or partner on whom a direction has been imposed under subsection (1) of this section, and any limited partner of an investment limited partnership in respect of which such a direction has been issued, may apply to the Court for, and the Court may grant, an order setting aside the direction.

(6) Upon an application made to it under subsection (5) of this section, the court shall not set aside a direction given by the Bank unless it is satisfied that the procedures laid down by, or the requirements of, this Act have not been complied with in any material respect, or that—

(a) there was no evidence upon which the Bank could reasonably conclude that the public interest or the interests of the proper and orderly regulation of investment limited partners required such a direction, or

(b) there was no evidence upon which the Bank could reasonably conclude that the state of affairs set forth in subsection (1) existed, or

(c) having regard to the matters established before the court and the proper and orderly regulation of investment limited partnerships, that the direction was not reasonably proportionate to those matters so established.

(7) An application under subsection (5) of this section shall not be entertained after the expiry of twenty one days from the date of making of the direction.

(8) The Bank may apply to the court for, and the court may grant, an order confirming a direction given under subsection (1) of this section or confirming and extending the period of operation of the direction for such period as the court may consider appropriate.

(9) A direction to which subsection (8) of this section applies shall cease to have effect—

(a) where the direction was confirmed, upon the expiration of the period to which the direction relates,

(b) where the direction was confirmed and the period of its operation was extended, upon the expiration of that extended period,

(c) from such date as the court by order determines,

(d) upon the making of a winding-up order in respect of the investment limited partnership, or the dissolution of the investment limited partnership,

(e) where the court is of the opinion that the circumstances which gave rise to the direction have ceased to exist and that it would be unjust and inequitable not to make an order to that effect, from such date as the court determines,

which ever occurs first.

(10) (a) Where the Bank is of the opinion that even if the custodian or partner on whom a direction has been imposed appears to be able to meet his obligations to creditors, but the circumstances giving rise to the direction are unlikely to be rectified it may forthwith apply to the court for, and the court may grant an order directing the custodian or partner to prepare, in consultation with the Bank, a scheme for the orderly termination of his business and the discharge of his liabilities and to submit the final scheme to the court within three months for the court's approval;

(b) Notice of an application under paragraph (a) shall be given by the general partner to the limited partners;

(c) The court shall not grant an order under paragraph (a) of this section unless it is satisfied that the proper and orderly regulation of investment limited partnerships as a whole and the interests of the partners and creditors of the investment limited partnership in question together with the creditors of the custodian or partners of the investment limited partnership, requires such an order;

(d) The court shall not approve the terms of the scheme without hearing the Bank and may adjudicate in the event of any dispute between the parties; and

(e) If the custodian or partner fails to comply with the order of the court or to adhere to the scheme approved by the court, the Bank may apply to the court for and the court may make such further order as it considers appropriate, including an order of committal or a winding up order on the grounds that it is just and equitable that the custodian or partner should be wound up.

(11) While a direction under this section is in force—

(a) an investment limited partnership to which it relates shall not be dissolved;

(b) the court may restrain any disposal of the assets of the investment limited partnership which will have the effect of perpetrating a fraud on the investment limited partnership, its creditors or partners.

(12) A general partner who fails to comply with subsections (3) and (10) (b) shall be guilty of an offence.

Power of court in case of failure to comply with requirement or condition.

34. —(1) Where, on an application made in a summary manner by the Bank, the court is satisfied that there has occurred or is occurring a failure by an investment limited partnership to comply with a requirement or condition imposed under or by virtue of this Act, the court may, by order, prohibit the continuance of the failure or enforce compliance with the requirement by the investment limited partnership, general partner or custodian.

(2) In determining whether to grant an order under this section, the court shall consider—

(a) the requirements of the orderly and proper regulation of investment limited partnerships;

(b) the interests of creditors of the investment limited partnership, the limited partners and creditors of the partners;

(c) the gravity of the non-compliance complained of.

(3) The court may grant such interim or interlocutory relief on an application under this section as in the light of the matters set forth in subsection (2), as it considers appropriate.

(4) An application under this section, other than application for interim relief, shall be made on notice to the investment limited partnership, the general partner and the custodian.

(5) Upon receipt of a notice of an application under this section, the general partner shall cause the limited partners to be forthwith informed thereof.

(6) A general partner who fails to comply with subsection (5) shall be guilty of an offence.

Personal liability of officers of general partner where failure to keep proper books or records.

35. —(1) Subject to subsection (2) of this section, if—

(a) an investment limited partnership is being wound up and is unable to pay all of its debts, and

(b) the court considers that there has been a contravention of section 16 (1) or section 25 (1) which has contributed to the inability of the investment limited partnership to pay all of its debts or has resulted in substantial uncertainty as to the assets and liabilities and client money or investment instruments of the said investment limited partnership or has substantially impeded its orderly winding up,

the court, on the application of the liquidator or the Bank or any creditor or limited partner may, if it thinks it proper to do so, declare that any one or more of the officers or former officers or both of the general partner who is or are responsible for the contravention shall be personally liable, without any limitation of liability, for all, or such part as may be specified by the Court, of the debts and other liabilities of the said investment limited partnership.

(2) On the hearing of an application under subsection (1) of this section, the person bringing the application may give evidence or call witnesses.

(3) (a) Where the court makes a declaration under subsection (1) of this section, it may give such directions as it thinks proper for the purpose of giving effect to the declaration and in particular may make provision for making the liability of any such person under the declaration a charge on any debt or obligation due from the investment limited partnership to him, or on any mortgage or charge or any interest in any mortgage or charge on any assets of the investment limited partnership held by or vested in him or any company or other person on his behalf, or any person claiming as assignee from or through the person liable under the declaration or any company or person acting on his behalf, and may from time to time make such further order as may be necessary for the purpose of enforcing any charge imposed under this subsection.

(b) In paragraph (a) of this subsection “assignee” includes any person to whom or in whose favour, by the directions of the person liable, the debt, obligation or mortgage was created, issued or transferred or the interest created but does not include an assignee for valuable consideration (not including consideration by way of marriage) given in good faith and without notice of any of the matters on the grounds of which the declaration is made.

(c) A copy of the declaration referred to in paragraph (a) above shall be lodged with the registrar of companies and made available for public inspection.

(4) The court shall not make a declaration under subsection (1) of this section in respect of a person if it considers that—

(a) he took all reasonable steps to secure compliance by the investment limited partnership with section 16 (1) or section 25 (1) of this Act, or

(b) he had reasonable grounds for believing and did believe that a competent and reliable person, acting under the supervision or control of a person who has been formally allocated such responsibility, was charged with the duty of ensuring that these sections were complied with and was in a position to discharge that duty.

(5) This section shall have effect notwithstanding that the person concerned may be liable to be prosecuted for a criminal offence in respect of the matters on the ground of which the declaration is to be made or that such person has been convicted of such an offence.

(6) In this section “officer”, in relation to a general partner includes a director, a person in accordance with whose directions or instructions the directors are accustomed to act, or the secretary.

(7) If—

(a) (i) an investment limited partnership is being wound up and is unable to pay all of its debts and has contravened section 16 (1) or section 25 (1) of this Act, and

(ii) the court considers that such contravention has contributed to the inability of the investment limited partnership to pay all of its debts or has resulted in substantial uncertainty as to the assets and liabilities or client money and investment instruments of the investment limited partnership or has substantially impeded the orderly winding up thereof,

every officer of the investment limited partnership who is in default shall be guilty of an offence.

(b) In a prosecution for an offence under this section, it shall be a defence for the person charged to show that—

(i) he took all reasonable steps to secure compliance by the investment limited partnership with section 16 (1) or section 25 (1), or

(ii) he had reasonable grounds for believing and did believe that a competent and reliable person, acting under the supervision or control of the investment limited partnership who has been formally allocated such responsibility, was charged with the duty of ensuring that that section was complied with and was in a position to discharge that duty.

(8) An investment limited partnership and a person who, being a director or member of an investment limited partnership fails to take all reasonable steps to secure compliance by the investment limited partnership with the requirement of section 16 (1) or section 25 (1) of the Act or has by his own wilful act been the cause of any default by the investment limited partnership thereunder, shall be guilty of an offence:

Provided, however, that—

(a) in any proceedings against a person in respect of an offence under this section consisting of a failure to take reasonable steps to secure compliance by the investment limited partnership with the requirements of section 16 (1) or section 25 (1), it shall be a defence to prove that he had reasonable grounds for believing and did believe that a competent and reliable person was charged with the duty of ensuring that those requirements were complied with and was in a position to discharge that duty, and

(b) a person shall not be sentenced to imprisonment for such an offence unless, in the opinion of the Court, the offence was committed wilfully.

Authorisation not a warranty by the Bank.

36. —The authorisation of an investment limited partnership by the Bank under this Act shall not constitute a warranty by the Bank as to the creditworthiness or financial standing of an investment limited partnership or its partners or custodian.